ARTICLE ON THE NEED OF SURVEYOR’S REPORT IN BANK RECOVERY PROCEEDINGS

 

ARTICLE ON THE NEED OF SURVEYOR’S REPORT IN BANK RECOVERY PROCEEDINGS

1. Introduction

In the domain of banking recovery and enforcement, verification of the mortgaged asset is of paramount importance. A Surveyor’s Report, prepared by a licensed or government-approved surveyor, provides an accurate, technical, and independent assessment of the property offered as security. Such a report plays a crucial role in ensuring that recovery actions initiated by banks under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) or other recovery mechanisms are based on verified and accurate physical facts.

---

2. Importance under the SARFAESI Framework

The SARFAESI Act mandates that every action by a secured creditor must conform to procedural and factual accuracy. At several stages, the Surveyor’s Report serves as an essential verification tool:

• (a) Before Issuance of Demand Notice [Section 13(2)]:
  The bank must confirm that the property mortgaged actually exists, is free from encumbrances, and matches the title documents. The surveyor’s report ensures that the property’s physical description corresponds to the mortgage deed and loan documents.

• (b) Prior to Taking Possession [Section 13(4)]:
  Before taking symbolic or physical possession, the bank may engage a surveyor to inspect and demarcate the property. This prevents overreach or inclusion of adjoining plots not covered under mortgage.

• (c) Before Auction or Sale [Rule 8 & 9 of the Security Interest (Enforcement) Rules, 2002]:
  The particulars of the property (plot number, area, classification, boundaries) published in auction notices must be accurate. A surveyor’s report ensures that the details disclosed to the public reflect the true identity and extent of the asset, thereby avoiding post-sale disputes.

---

3. Evidentiary Value in DRT and Judicial Proceedings

In recovery applications before the Debts Recovery Tribunal (DRT) or in borrower’s challenges under Section 17 of the SARFAESI Act, disputes often arise regarding the identification or measurement of the secured asset. The surveyor’s report acts as expert evidence under Section 45 of the Indian Evidence Act, 1872, providing technical clarity to the Tribunal.
Such reports assist in determining:

• The correctness of property boundaries and extent.

• Existence of encroachments or third-party occupation.

• Correlation between mortgaged property and the property described in the bank’s notices.

Hence, it strengthens the evidentiary foundation of the bank’s recovery process.

---

4. Protection of the Bank’s Legal Interests

A professionally prepared Surveyor’s Report safeguards the secured creditor against several legal and procedural risks:

• Prevents wrongful possession or seizure of non-mortgaged land.

• Confirms that the property description in notices matches the deed.

• Detects encroachments, illegal constructions, or sub-letting.

• Serves as documentary evidence in DRT and appellate proceedings.

In this manner, the report ensures due diligence, procedural fairness, and defensibility of the bank’s actions.

---

5. Role in Valuation and Realisation

Survey data forms the basis for valuation by approved valuers, who rely on the measurements and boundary details certified by the surveyor. Correct valuation, in turn, determines the reserve price under Rule 8(5) of the Security Interest (Enforcement) Rules, 2002. Thus, a reliable survey report protects the bank from future challenges of under-valuation or defective sale.

---

6. Judicial Recognition

The Supreme Court of India in Transcore v. Union of India [(2008) 1 SCC 125]*, emphasized the necessity of adherence to procedural and factual accuracy under the SARFAESI Act. Similarly, DRT and DRAT decisions have consistently underscored that survey verification of the secured asset is essential to maintain transparency and fairness in possession and sale proceedings.

---

7. Conclusion

The Surveyor’s Report stands as a cornerstone of integrity in bank recovery proceedings. It verifies the ground reality of the mortgaged property, aids in correct valuation, and provides defensible technical evidence before judicial forums.
By ensuring that the bank’s actions are both lawful and factually precise, it protects the interests of all stakeholders — the bank, the borrower, and prospective purchasers.
Therefore, incorporation of a Surveyor’s Report at every material stage of the SARFAESI process is not only a matter of procedural prudence but also a guarantee of fairness and legal compliance.